“Money Court,” O’Shares ETFs chairman Kevin O’Leary hears regular people’s trickiest money problems and decides how they should settle them. His rulings are binding: All litigants on the show sign a contract agreeing to follow his advice.
The first episode premieres Wednesday, August 11, and features Jared and Karina Rabin, a husband and wife fighting over whether they should sell their $1.1 million house to invest in the next generation of Jared’s invention, a 2-in-1 ruler and level called the Hang-O-Matic, which helps users hang up a picture frame or shelf perfectly straight.
Jared thinks that the new version of his product will be a surefire success. He just needs the cash. Karina counters that they need the stability of their home because the couple has two young sons.
The case
Jared wants to expand the Hang-O-Matic business with a premium version of his product that includes a built-in stud finder. The couple currently make $330,000 a year in profit off of $1.2 million in Hang-O-Matic sales, but he doesn’t think this is enough to fund the next generation.
Jared estimates production of the new product will cost nearly $400,000, with $90,000 going toward new tooling and molds, and the other $300,000 going toward building up inventory.
To pay for this, Jared wants to sell the couple’s $1.1 million cul-de-sac home. He says that the couple can’t use the profits from their Hang-O-Matic sales because those were already used to purchase their home.
Karina is against selling the house, arguing that she has never stayed in one place for long her entire life. She also says that the couple already sold a home once when getting the original Hang-O-Matic off the ground.
“I have moved all my life, and I feel like we finally have stability in our home, with our kids,” she tells O’Leary. “I am really comfortable and I really don’t want to do this again!”
O’Leary’s take
“I love that case,” O’Leary tells CNBC Make It. “I really did, because it detailed what makes America great and what makes family businesses work and what the dynamic is between a man and a woman in a successful marriage and a successful business.”
The mistake Jared is making, he says, is taking the security his family has in their lives and attempting to gamble it in an effort to increase already-strong annual sales with a new product.
“Most marriages that fall apart not because of infidelity, it’s because of financial stress,” O’Leary says. “I’m telling you right now, your wife is stressed out. There’s no question about it.”
When Jared argues that what he wants to do is a “sure bet” because he’s convinced that the new product will be a hit, O’Leary cuts him off.
“There’s no such thing as a sure bet,” O’Leary says. “Until the first product sells off the shelf, you don’t know. Because not every product works every time.”
The verdict
“She wants to really solidify her life, and deserves it at this point,” O’Leary says as he weighs his options. “And he’s got a great product. How could I not respect that?”
Ultimately, O’Leary decides on a compromise. “There’s more than one way to skin a cat when it comes to raising money,” he says.
Instead of selling their home, O’Leary delivers a ruling that he thinks will satisfy both parties. He orders the couple to use their home’s equity to borrow $90,000 to create the molds for the new product and will later borrow $150,000 for inventory. Once the product begins to sell, then they can worry about more inventory.
“You haven’t sold the farm to [grow your business],” he says of the solution. “You haven’t bet your family. You’ve done it in a pragmatic financial way, which you expect Mr. Wonderful to come up with.”
